In the U.S., banks have complained about the lack of a role in the management of bitcoin ETFs.
The Association of American Banks sent a letter to SEC Chairman Gary Gensler requesting a change in the definition of crypto assets, so financial organizations can participate in the custody of spot bitcoin ETFs.
Signatories included the Bank Policy Institute, the American Bankers Association, the Financial Services Forum, and the Securities Industry and Financial Markets Association.
"The Commission recently approved 11 spot bitcoin ETFs, providing investors access to this asset class through a regulated product. However, these instruments clearly lack banking organizations acting as custodians. This role they have regularly played for most other ETPs."
The banking association requested that the regulator make changes to Staff Accounting Bulletin 121 (SAB 121), approved in March 2022. The document contains recommendations for the custody of cryptocurrencies.
Representatives of financial organizations noted that over the two years since the release of the guidelines, there have been 'several important events,' including the launch of spot ETFs based on the first cryptocurrency.
Current regulations require banks to hold assets on their balance sheets. This makes custody expensive and limits the ability of institutions to provide custodial services on a large scale, the association emphasized.
Amendments to SAB 121 are intended to narrow the definition of digital assets and exclude traditional products recorded on the blockchain from the document. This approach, according to the initiative's authors, will prevent tokenized deposits from falling under strict rules for cryptocurrencies.
Banks are also calling for the elimination of the rule on direct custody of funds on the balance sheet, but to keep disclosure requirements. This would allow them to participate in 'certain types of cryptocurrency activities while maintaining transparency for investors.'
Bitwise Chief Investment Officer Matt Hougan noted that bitcoin ETFs have changed the 'tone around cryptocurrency regulation' in the U.S.